Hanoi - Australia will help Vietnam improve rural electricity supplies and advance higher education, Australian Foreign Minister Stephen Smith announced during his two-day visit to Vietnam.

Foreign Minister Smith pledged 3.5 million Australian dollars (3.35 million US dollars) to Vietnam to improve the reliability and efficiency of electricity supplies to rural communities and support three local power companies to adapt to power sector reforms.

The funds are part of a $30-million-Australian-dollar energy aid project to Mekong countries - Vietnam, Laos and Cambodia - that Australia will disperse through the World Bank over the next four years.

During his meeting with Prime Minster Dung Wednesday, Minister Smith said Australia is making education a focus of its assistance to the Southeast Asian country.

"In the development assistance area, Australia has a 100-million- dollar program a year for Vietnam and we are looking at further infrastructure," Foreign Minister Smith told local media after the meeting.

"But also, importantly, we are looking at education and increasing the number of scholarships that Australia offers to young Vietnamese students wanting to study at university at graduate and postgraduate level.

"So we see education, enhancing the education links, as being very important."

There are more than 9,700 Vietnamese students currently studying in Australia and thousands studying locally at Australian-funded institutions, local media reported.

Australia committed 93.1 million Australian dollars in official development assistance capital to Vietnam this year, making Vietnam its fourth largest aid recipient.

During the two-day visit the two sides agreed to increase cooperation in regional and multilateral forums alongside discussing negotiations of a free trade agreement between the ASEAN, Australia and New Zealand.

The visit by the Australian Foreign Affairs Minister, the first visit by a minister of the new government, was made to boost bilateral ties and mark 35 years of diplomatic relations between the two countries. (dpa)